Offshore wind power cheaper than new nuclear

Cost of subsidies for new offshore wind farms have halved since 2015 at the last auction for clean energy projects, meaning energy from offshore wind in the UK will be cheaper than electricity from new nuclear power for the first time.

Two firms said they were willing to build offshore wind farms for a subsidy of £57.50 per megawatt hour for 2022-23. This compares with the new Hinkley Point C nuclear plant securing subsidies of £92.50 Mwh. However, nuclear firms say the UK still needs a mix of low-carbon energy, especially for when wind power is not available.

The figures for offshore wind, from the Department for Business, Energy and Industrial Strategy, were revealed as the result of an auction for subsidies, in which the lowest bidder wins. In the 2015 auction, offshore wind farm projects won subsidies between £114 and £120 Mwh.

“We still think nuclear can be part of the mix - but our industry has shown how to drive costs down, and now they need to do the same,” she added.

Bigger turbines, higher voltage cables and lower cost foundations, as well as growth in the UK supply chain and the downturn in the oil and gas industry have all contributed to falling prices.

Tom Greatrex, chief executive of the Nuclear Industry Association, said: “It doesn't matter how low the price of offshore wind is. On last year's figures, it only produced electricity for 36% of the time.”

EDF, which is building the Hinkley Point C nuclear plant, said the UK still needed a “diverse, well-balanced” mix of low-carbon energy.

“New nuclear remains competitive for consumers who face extra costs in providing back-up power when the wind doesn't blow or the sun doesn't shine,” the French firm said. “There are also costs of dealing with excess electricity when there is too much wind or sun.”

EDF added that energy from new nuclear plants would become cheaper as the market matures, as has happened with offshore wind.

UK government policy appears to have helped to lower the costs by nurturing the fledgling industry, incentivising it to expand and then demanding firms should bid in auction for their subsidies.

Minister for Energy and Industry Richard Harrington said: “We've placed clean growth at the heart of the Industrial Strategy to unlock opportunities across the country, while cutting carbon emissions.

“The offshore wind sector alone will invest £17.5bn in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today.”

Along with three offshore wind farm projects, biomass and energy from waste plants have secured subsidies for low-carbon energy, with a total of 11 successful schemes in the latest auction. But, experts warn that in order to meet the UK's long term climate goals, additional sources of low-carbon energy will still be needed.